Vici Properties sheds light on Sands acquisition

The deal, which is expected to close later this year, should generate $250 million of incremental annual rent for Vici.

“The Venetian checks many of the boxes that are crucial to successful real estate investing,” Vici President and Chief Operating Officer John Payne said in a Friday call with investors. “This is an irreplaceable, iconic world-class asset, center of the Strip located. (The purchase) was a competitive process.”

Impending Sands purchase

The Caesars Entertainment Inc.-affiliated REIT acquired 14 assets in the last 42 months, doubling the size of its portfolio and making it one of the most active REITs in the gaming sector.

Continued growth includes Vici and Apollo Global Management Inc.’s agreement to purchase Sands’ Las Vegas assets for $6.25 billion, $4 billion of which is from Vici.

Payne said the purchase, Vici’s largest transaction to date, will hand over “one of the top revenue-generating real estate assets in the world.”

Upon closing, Apollo is set to take over the cash flow from operations and pay Vici rent.

“This whole (acquisition) process began in late (2020) … when the U.S. was at a point of COVID resurgence that was causing a lot of uncertainty,” Vici CEO Edward Pitoniak said Friday. “And thus we were able to take action with Apollo at a time when many others couldn’t or wouldn’t. … A whole lot of would-be-bidders were sidelined because of uncertainty.”

Pitoniak shed more light on Apollo’s plans with the assets, saying that it’s typical for private equity firms such as Apollo to exit once they’ve created “a lot of value.”

“Our prevailing assumption is that they will exit when the asset is performing very well, and when the asset will be very attractive within whatever structure the exit takes place,” Pitoniak said. “At this point I don’t think that’s predefined.”

Las Vegas recovery looking strong

Vici saw a 47 percent year-over-year jump in revenue to $374.3 million, a record for the company. Net income was $272 million for the quarter. Adjusted funds from operations, which measures cash flow, increased 42 percent year-over-year to $255 million.

Payne added that the company is excited about the resurgence of visitation and spending among U.S. gaming jurisdictions, and remain bullish on the Las Vegas market.

“The recovery in Las Vegas is accelerating,” Payne said. “Leisure customers have already returned in great numbers, and convention and meeting bookings continue to grow. We … look forward to growing our portfolio in this geography.”

Vici shares closed down 0.4 percent Friday at $31.70 on the New York Stock Exchange.

The Review-Journal is owned by the family of Sheldon Adelson, the late chairman and CEO of Las Vegas Sands Corp., which operates The Venetian and Sands Expo and Convention Center.

Contact Bailey Schulz at bschulz@reviewjournal.com. Follow @bailey_schulz on Twitter.